What is the main difference between the demand curves for the perfect competitor and the monopolist?
What will be an ideal response?
The perfect competitor faces a horizontal demand curve because it has no control over the market price. By contrast, the monopolist is the sole supplier of the entire industry so that it faces the industry demand curve, which is downward sloping.
You might also like to view...
Advocates of flexible exchange rates claim that under flexible exchange rates, the central bank of
A) an overheated economy could cool down activity by increasing the money supply without worrying that undesired reserve inflow would undermine its stabilization effort. B) a cooled economy could cool down activity by contracting the money supply without worrying that undesired reserve inflow would undermine its stabilization effort. C) an overheated economy could cool down activity by contracting the money supply without worrying that undesired reserve inflow would undermine its stabilization effort. D) an overheated economy could cool down activity by contracting the money supply without worrying that undesired reserve outflow would undermine its stabilization effort. E) an overheated economy could cool down activity by decreasing employment and increasing output without worrying that this would undermine its stabilization effort.
Which of the following is most nearly consistent with Say's law?
A) When a person produces one good, he or she plans to demand other goods. B) When a person produces a good, he or she plans to sell it. C) When a person buys a good, he or she plans to pay for it with money. D) When a person goes to work, he or she plans to produce.
When the federal government becomes heavily involved in programs that favor well-organized business interest at the expense of others, the expected result is
a. more rapid economic growth, because programs of this type are generally productive. b. a reduction in rent seeking activities because political decision-makers will want to promote smaller, innovative firms rather than large firms that are a major source of political contributions. c. less innovation because political decision-makers will tend to favor older firms with a stronger record of providing political support rather than newer, innovative start-up firms. d. a decline in the competitiveness of elections, because politicians will find it more difficult to raise campaign contributions.
If a positive permanent supply shock were to occur, the resulting equilibrium would be a:
A. higher level of output at lower prices. B. lower level of output and prices. C. higher level of output and prices. D. lower level of output at higher prices.